Foreclosure Follies

Veronica Gallon went and got her gun. This was just the kind of thing she and her husband, George, had left the north Jacksonville ghettos to avoid: some guy banging and rattling the door in the middle of the night, like a crazed killer or God knows what. Veronica wasn't having it. So she grabbed her gun and plopped down on the front room rug.

"I was in my PJs, looking at TV and getting ready to go to bed for work," she recalls. She doesn't answer her door at night, so at first she just ignored the knock. "Then the knock becomes a banging," she continues, her voice rising. "I peep out the blinds, and I see this white guy," she explains. "I could see him, but he couldn't see me." She noticed his car was idling, with the driver-side door standing open. "Whatever he came to do, he was gonna do it and jump!"

Veronica knew the house was in foreclosure, of course; not a day goes by without a reminder. "First time the phone rings in the morning, it's them," George says with a sigh. "Last time the phone rings at night, it's them." But she long ago checked out of the process in frustration. She couldn't keep up with the bizarre twists and turns, the seemingly random letters from companies she'd never heard of making demands she couldn't believe. But she never imagined that the man banging on her door worked for a company that worked for a company that services her loan on behalf of some Borg-sounding entity called ABFC 2006-HE1 Trust.

Veronica is an ebullient woman. At 45, she radiates giddy teenage youth, doubling over in belly laughs at her own jokes. But she insists her quick smile morphs just as effortlessly into a snarl, and it was only after Veronica called George, at his job as a night security guard, that she calmed down. They both swear it's just dumb luck that American Home Mortgage Servicing didn't lose a contractor that night.

We hear a lot about the big picture of the mortgage crisis: at the end of last year, a little more than 11 percent of homeowners were delinquent or in foreclosure. But the Gallons reveal what it looks like in the micro. All over the country, confused, struggling borrowers and an opaque army of industry contractors are fumbling toward each other in the dark, with guns drawn.

President Obama has unveiled a plan to order this chaos and stop the devastating losses. But last week the Senate doomed his initiative by stripping it of the only element that would have given struggling borrowers enough leverage to demand a fair deal from the banks. Without that leverage, the president’s $75 billion plan merely props up a mortgage servicing industry that has neither the will nor the ability to fix itself.